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Sun Jan 03 00:00:00 EAT 2010

Secret report on oil firm leaks

A secret document compiled by one of the security organisations on the activities of Eni (SpA) has named a very senior and long-standing politician in government as being a front for the Italian oil firm that is hoping to invest in Uganda on the promise that he will receive millions of dollars in commission fees.

Like the dark oil smoke, the exploration in the Albertine is surrounded by controversy . FILE PHOTO

In Summary

According to the document, the current squabbling involving Tullow Oil and Heritage-Eni started when a senior government official allegedly leaked to Eni details of a State House meeting between government and Tullow.

Richard Wanambwa

Kampala

A secret document compiled by one of the security organisations on the activities of Eni (SpA) has named a very senior and long-standing politician in government as being a front for the Italian oil firm that is hoping to invest in Uganda on the promise that he will receive millions of dollars in commission fees.

Eni associates reportedly arrived in the country in November and have been engaging in behind-the-scenes transactions out of Paraa Safari Lodge where they are said to have camped.According to the December 17, 2009 document titled, ‘Forces behind the battles by Eni (SpA), Tullow oil-Heritage oil over Uganda’s oil’, the politician used a company called TKL, an off-shore outfit, owned by a Mr Christian Eidem to link them to Eni business associates in Tripoli.

Two middlemen “The deal is brokered by two Ugandan officials on behalf of the senior local politician as foremen,” the document indicates.

“Eni are actively coveting part of the Tullow Oil license, Eni have placed a deal on the table for a refinery and even produced a MoU to be signed at the highest level in the country without any studies and due diligence,” the document adds.

According to the document, the current squabbling involving Tullow Oil and Heritage-Eni started when a senior government official allegedly leaked to Eni details of a State House meeting between government and Tullow.

If true, the alleged leaking of material information to a third party may amount to a breach of confidential clauses in the Production Sharing Agreement which Tullow signed with the government of Uganda.

“Tullow officials said that the issue of Tullow’s oil license was secret and restricted within top government circles. Tullow officials said the only way Eni could know about the license issue is through someone high in government in a position of knowledge who passed the information to Eni,” reads the document which sources say has been brought to the attention of President Museveni.

Yesterday, a senior official working in the external affairs department of Tullow Oil, but who preferred not to be named, confirmed to Sunday Monitor that indeed there was a leak although he also stated that the security dossier does not accurately capture the present state of affairs.

Efforts to speak to Tullow chairman Elly Karuhanga were futile as he’s known mobile telephones were switched off.“Eni have stated in the press that they have been into the Tullow oil data room. Tullow oil officials said that this is “absolutely false” because there is no existing confidentiality agreement between Eni and Tullow,” the document further reads.

In the oil industry, a confidentiality agreement is a prerequisite to enter another entity’s data room with which one company may want to form a partnership.

On December 6, 2008, Libya announced it had bought a 10 per cent stake in Eni. The investment made Libya Eni’s second biggest shareholders after the Italian government that owns 20.3 per cent.

Minister of Energy and Mineral Development Hilary Onek told Parliament last year that four exploration companies have so far been licensed to prospect in five out of the available 10 exploration areas in the Albertine Graben.

“There is a lot of interests in the areas which are not licensed but licensing of new areas has been suspended until a new regulatory framework for oil and gas subsector is put in place by mid 2010,” Mr Onek said in his statement.

Tullow’s planThe security report says that Tullow is considering offloading its 50 per cent share to Exxon Mobil Corp, the biggest oil company in the world. Battle lines have, however, been drawn between the two oil firms after Heritage decided to sell its fields in Uganda to Eni for between $1.3 billion and $1.5 billion well knowing that under a standing pre-emption clause, they should have given Tullow the first opportunity to buy.

A total of 800 million barrels of oil worth over $50 billion have so far been confirmed in Uganda but the actual production of oil will start in 2011.

When contacted, Mr Onek declined to comment when Sunday Monitor contacted him, saying he is on holiday.